Despite the oil embargo's potential for provoking tensions with Moscow the package is calculated to heighten the political isolation of Belgrade and its ruling elite.
Yugoslavia buys about 50,000 tonnes of crude a month from Moscow. Russia's Foreign Minister, Igor Ivanov, yesterday said only the United Nations could impose sanctions, and that a Nato-backed embargo would not be binding on Russia.
A spokesman from the Fuel and Energy Ministry was more categoric: Russian oil deliveries will continue, he said.
The new European Union measures were put in place as Tony Blair warned that the economic and military campaign against Yugoslavia would intensify until the Milosevic regime backed down.
On his return from the Nato summit in Washington, the Prime Minister rejected charges from within his own party that he is Nato's most "hawkish" leader but said there was no question of compromise with the Serb leader over the alliance's demands for restoring peace to Kosovo.
"In respect of being a hawk or not a hawk, it's nothing to do with that. Having taken this action, we have got to see it through," Mr Blair told the Commons.
"Some of the stories of the cruelty and barbarity practised by Serb militia are evil beyond belief... Nato will and must prevail. It is our collective task now to make that victory, of justice over evil, a reality for Kosovo's long-suffering people," he said.
He warned that "grave consequences" would follow if Mr Milosevic attempted to destabilise the region with military action in the pro-Western Yugoslavia republic of Montenegro, and in Hungary, Romania, Macedonia, Albania and Bulgaria.
"It is not an aim of military action to remove Milosevic, but while Milosevic remains in power, the security of the region is more difficult," he said.
Meeting in Luxembourg, EU foreign ministers extended a travel ban on Belgrade businessmen to people with close ties to the Milosevic regime and family. President Milosevic and his cronies will also be brought under the scope of a freeze on assets held by the Yugoslav government. "The package is getting tighter and tighter," said one EU diplomat. "This means that if the telephone system is bombed people cannot export mobile phones to help communications. The problem, of course, is enforcement."
The EU is stepping up pressure on eastern European countries that aspire to membership of the bloc to back the oil embargo. Joschka Fischer, Germany's Foreign Minister, said the sanctions package represented "a broad recognition of the seriousness of the situation and a general desire to pursue the policy adopted so far".
Mr Fischer moved to defuse concern over the oil blockade and the fear that Nato warships will seek to stop and search Russian ships. The Washington summit had not gone that far, he said. The EU ban will be policed by member states.
EU ministers failed to agree a full ban on sporting contacts with Yugoslavia, and neutral countries expressed reservations about the Nato action. However, both Rome and Athens agreed to the oil embargo despite earlier reservations.
Meanwhile Strobe Talbott, the US envoy, is due in Moscow today and Kofi Annan, the UN secretary-general, will visit later this week. Despite potential tensions over the oil embargo, relations between Nato and Moscow have softened. Nato has stressed the importance of Russia's role as possible mediator. Russia has toned down its anti-Nato rhetoric. It is eyeing prizes down the road - the glory of eventually playing peacemaker, and the prospect that the Yugoslav conflict will ultimately damage Nato.Reuse content